Paul Ryan’s ‘inefficient providers’

On “Meet the Press” yesterday, House Budget Committee Chairman Paul Ryan (R-Wis.) continued to defend his plan to end Medicare, arguing, “If I could put it in a nutshell, we’re saying don’t affect current seniors, give future seniors the ability to deny business to inefficient providers.”

It’s a line that comes up a lot. In fact, Ryan made the same pitch, almost word for word, last week in his big economic speech in Chicago.

As Jared Bernstein explained this morning, “Just because Rep. Paul Ryan keeps saying it doesn’t make it any less egregiously wrong.”

To get why this “market solution” can’t work, you have to understand a bit about how Ryan’s plan changes Medicare. As is by now pretty widely appreciated, including by many in his own party, the plan ends guaranteed health care coverage for seniors and replaces it with a voucher for them to shop for insurance on the street.

Importantly, the value of those vouchers start well below where they need to be to enable seniors to afford coverage comparable to Medicare today (in fact, beneficiaries costs would have to double), and their value falls increasing behind coverage costs over time.

Suppose you send me to the grocery store to buy you a gallon of milk. Milk costs $3.50 a gallon but you give me $2. I spend the whole day “denying business to inefficient providers” — i.e., grocers who all charge more than that — and at the end of the day, bring you back a pint.

Now, instead of milk, where I’ve got the information I need to be a smart shopper, suppose you give me the same under-priced voucher but ask me to bring you back a plan for treating that strange pain you’ve been experience on your left side on humid days.

There’s no “denying business to inefficient providers” in the Ryan plan because there’s no market discipline that average folks with incomplete information armed with an inadequate voucher can enforce on a private health insurance market that’s … well, different.

There’s probably nothing Paul Ryan can do to affect the media’s perception of him as a credible, wonky expert, bravely telling uncomfortable truths. But for those who take reality seriously, the man is still little more than a telegenic fraud.

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